FFS076 - Dylan LeClair

Dylan: [00:00:00] It's like very, very much simple why this, this story will continue, why, you know, why there's going to be no secular top for Bitcoin. There's not going to be. This one final peak and then it all, you know, the story was great, but it all comes crumbling down. It's like, what, causes this story that's been proliferating this idea, this network that's been proliferating since 2009 to stop?

That's the real question everyone should be asking. because yeah, there could be lapses in momentum and drawdowns and hiccups and speed bumps, but what's, what causes this idea to stop and actually reverse? And there is no answer. and there is no good answer to that Is

Intro

Luke: Welcome back to the Freedom Footprint Show, the Bitcoin philosophy show with Knut Svanholm and me, Luke the Pseudo Finn. And our guest today is Dylan LeClair. You might know him for his fantastic Bitcoin analysis, everything from on chain to talking about macro situations, things like that.

We, to be honest, we haven't really had someone who's who's that much of an expert in this topic on the show before. So really excited to have you, Dylan. Welcome to the Freedom Footprint Show.

Dylan: Thanks so much, guys. Yeah, I'm [00:01:00] really happy to be here and happy we could make this work.

Knut: Yeah, good to see you Dylan. Last time we saw you in real life was in Riga. We tried to pull off an interview there, but couldn't find the time. There's so much going on in Riga, so we're doing it now instead. And yeah, could you give us a TLDR on Dylan LeClair and also how did you find Bitcoin and what did you find so compelling about it?

What's your, what's your orange pill story?

Dylan: Yeah, totally. Um, I've gone through it a bit before, so it won't make it too long winded. But, essentially was, was always a math numbers guy, uh, started studying business and finance sort of topics very, very deeply, uh, when I was in high school, before I went to university. you know, Warren Buffett style, like value investing, um, you know, compound interest, like the, the basic building block concepts actually, you know, stumbled one of the first touch points with Bitcoin, um, other than like an ICO bubble that someone, kind of in my family [00:02:00] went through.

was actually Preston's show, which was funny enough, but didn't like go full orange pilled. you know, I, I was familiar with some of the, the Bitcoin maximalists on Twitter, but it wasn't like fully down the rabbit hole. And then, uh, you know, I, I also was very, very much familiar with like the plan B, like stock to flow model.

And again, not that it was gospel for me, but more as a math guy, it was like, I looked at a linear regression on a log scale and was like. Whoa, you know, this is like, what, what is this, what's going on here? Difficulty adjustment, having all those concepts and really understanding those at a deeper level.

and then COVID happened. Um, and I'm in the midst of, you know, Ray Dalio's debt cycle framework, short term debt cycle, long term debt cycle, these kind of, these long macro, uh, cycles, the rise and fall of empires, the fourth turning concepts. And you know, there's just this system, this network, this protocol, that's seemingly, you know, living and breathing dynamic, never dies, can't kill it.

And it just clicked. Um, so I, I left school, went all in on Bitcoin, [00:03:00] not as, not because I had a job in the space, I didn't. and, and I tell people it's not like it, when, when you get that Bitcoin moment, it's you, like, you really shouldn't want, or like, not that it's a bad thing, the Bitcoin industry is fantastic.

But it's not like you need to go like be a Bitcoin marketer, be a Bitcoin, like work at a Bitcoin company. It's like, no, whatever your expertise is, if you have one, if not, that's okay. We're all learning and building, but do that thing on a Bitcoin standard if you get it. But for me, I was, I didn't have any skills.

I was figuring stuff out, work manual labor for a year, just to stack stats. Um, and then through Twitter, just stumbled my way into Bitcoin magazine as a. You know, just kind of on the back end, um, started writing a bit, did well. Twitter, some shows, and all of a sudden kind of stumbled my way into, a cool role in the space of just, you know, looking at data and analytics, kind of the convergence of Bitcoin and macro finance.

And it's cool because, you know, someone like [00:04:00] myself, pretty young, don't like, doesn't have, you know, the traditional credentials of, uh, you know, the Wall Street path. I had no MBA. I don't even have a bachelor's degree. but I think it's more about the merit, the merit of your ideas, right? And so Bitcoin has obviously done very well.

It's gone, you know, it's had its ups and downs, but for me, it's less about where Bitcoin trades today, tomorrow, next week, next year. More about this overarching thesis that I have and that many of us have and share, um, that there's a huge problem in the world, the money's broken, and there's really, you know, there's, you can have a solution or an idea, but Bitcoin is, is basically, you know, in my opinion, in my view, the most pure form of like an engineering solution to this problem.

So that's kind of what I've gone all in on, um, from a career standpoint, from a social standpoint, from a reputational standpoint, and from a financial standpoint. I'm all in on that idea, and you know, that brings us here, I guess, is the short version of it.

Austrian Economics

Knut: Yeah. Cool. this begs the question, [00:05:00] uh, the HH how much of a deep dive have you done into Austrian economics and Pology and that stuff?

Dylan: So I will say I'm familiar with all the concepts. I'm familiar with, with, you know, the idea of human action and value being subjective and not, uh, intrinsic. but I haven't read the texts, uh, or at least some parts of them, but I haven't, you know, gone down a full, uh, you know, Mises textbook or down, down that rabbit hole of sorts, but I'm familiar.

Just from like, you know, the, the schools of thought of like. The Saifuddin's, Pierre Richard's, Wittstein's, you know, Nakamoto Institute, that whole, that whole, uh, you know, subset of, of Bitcoiners. I'm, I'm very much familiar with all of that. but yeah, could probably touch up on some of the, on some of the original texts though, admittedly.

Knut: the thing I was getting at here is that, They all lay out a pretty compelling case, both Mises Rothbard and Hoppe after him, uh, about how macroeconomics is, uh, not really, [00:06:00] not, not really a solid science, like all of this, uh, economic market analysis things are really just trying to apply mathematics to something that Cannot really be quantified.

So it's like, Saylor says, like, there might be a moment where all your models are destroyed because some actor does some seemingly irrational things. So, like, how, how much can you know about markets and like, uh, what is, what is market analysis and what role does it play in, in, uh, in this environment?

Theory of Reflexivity in Economics

Dylan: Yeah. So I actually have a book here it's, it's actually probably the opposite of what you'd think of in terms of Austrian economics. And I think he's a pretty terrible person, but it's, I really love the concept here. And it's the alchemy of finance by George Soros and it talks about like the theory of reflexivity, and it's essentially like you, you know, the traditional thought model of like, okay, input, output.

[00:07:00] Um, is flawed or of like, or like, Oh, like of a efficient market is, is flawed when the, the, I, the, when something happening actually changes the likelihood of that event happening in the first place, or like, for instance, like, let me give you a good example, someone, and this maybe isn't even the perfect example of it, but Bitcoin Bitcoin is, as, as this idea, as this monetary asset is, is, you know, just this, this tiny little thing.

It's a speculative little thing in the corner of the internet worth a million bucks. And once Bitcoin becomes 10 million or a hundred million dollars, the liquidity of Bitcoin improves, the adoption improves, and the idea may be in everybody's mind of Bitcoin actually becoming a money that could be used for global settlement, global trade.

It becomes more likely and the technology becomes more, uh, becomes, becomes more efficient, becomes more widely adopted, the liquidity improves, et cetera. So the reflexivity of Bitcoin's likelihood of actually proliferating and becoming the global [00:08:00] money increases, right? And so that's, that's almost a reflexive idea, but that can be applied to anything that can be applied to.

Equity markets that can be applied to currencies that can be applied to, you know, what, whatever it may be is, uh, and I'm not explaining it, uh, in, in the right way, but I think oftentimes like that's very much fascinating. But macroeconomics as an idea is often actually just trying to imply essentially human action or some form of central planning.

And I totally recognize that. That's the flawed system we live in. A lot of this stuff, this. This, this cycle sort of stuff in the, in the macro world is essentially trying to predict, you know, when the central planners or when the, uh, you know, government central banks are going to act. Right. And it's like this game of chicken of like, okay, when, you know, when is the tightening or the easing or the, you know, intervention coming and, you know, for what it, for what it's worth.

And maybe this is, you know, maybe one of the core problems of society that Bitcoin ultimately [00:09:00] fixes or roots out of, is that, is that there are people that have, you know, worth billions of, you know, hundreds of millions, you know, untold amounts of money based on just playing these games, right? I've just numbers on a screen, right?

Like I, I can just know these cycles. I can borrow a bunch of money. I can, or not even know, but like interpret influence these cycles. Borrow a bunch of money, financial engineer my way into immense amount of wealth without actually, like, producing anything, right? you know, so there's, there's many examples of that.

So macroeconomics, like, it totally is a pseudoscience. There's no, there's no, there's no, like, it's not like there's a Pythagorean theorem of like a squared plus b squared equals c squared. Like, there's not actually this one equation or rule, right? It's just kind of the evolving. You know, meshy sort of framework of ideas that kind of can be interpreted however you wish.

Um, but there, there are true principles, right? There are, there are things that are unavoidable. Um, you know, gravity will always apply. Um, so I think, you know, there is, there is some grounding in reality, but less [00:10:00] so than I think many people, including maybe myself, as I sometimes present it, would like to, like, let you believe, right?

Everybody's trying to figure this fucking game out. Excuse my French. Ha ha ha. Excuse my French on it. I, I don't mean to,

Knut: French is beautiful.

Dylan: uh, but, but like, yeah, you know, it's a total. It's a total guess. It's total guesswork. No one actually has the answers. And same, you know, same in, in, you know, Bitcoin or whatever, right?

It's like, if, oh, it's like, oh, you know, 58k is programmed, you know? It's like, well, no, it's not actually. Plan B's model is a model. Uh, it's not like, it was never gospel. Uh, there's nothing that just because the halving happens doesn't mean number goes, like these things, like. Are all of us, you know, humans like on a spinning rock trying to figure something out and just guessing with patchwork?

It's nothing is actually, you know, you can't actually like program human action, like that, but you know, directionally, obviously I agree with a lot of the stuff.

Miners, Hodlers, and Traders

Knut: Yeah, uh, this all [00:11:00] reminds me of a recent article by Armand de Parman that I read about how there are three types of Bitcoin accumulators. And he categorized them into three subcategories. The first is miners, the second is traders, and the third is hodlers. And the, uh, the miners can, of course, also be hodlers if they are profitable enough to keep some of their Bitcoin.

Of course, they have bills to pay. Uh, the traders just want to do this, uh, analysis thing and, uh, buy and sell and try, try to buy low and sell high. While the hodlers are, uh, those of us that, that think that they, uh, you don't need how to To learn how to trade Bitcoin, you need to learn how to not trade Bitcoin.

That's a better strategy. Like over time. If you look at your average trader and your average ler, the, the LER has outperformed the trader by orders of [00:12:00] magnitude over the last 10 years. Like it, it's no question about it, one of the best moves you could have done in the last 10 years or 12 years was. To just sit on your ass and hodl your bitcoin securely for as long as it could.

That outperformed almost any type of trading that anyone

Dylan: any price, right? At

Knut: Yeah, at any price, and this, I believe this will always be true, at least until hyperbitcoinization, this thing, uh, this. Mechanism. So, so I think that, like, so the HODLers are obviously growing in numbers because more and more people figure out that this is a less time consuming and less risky way to get wealthy over time by just not trading the thing but HODLing it.

So the amount of traders in, uh, relation to the amount of HODLers is going down. And also, like, people think that we can't see this kind of exponential growth, next 12 [00:13:00] years. We've already seen it here the first 12 years, or 14 years, like, uh, the, um, uh, Bitcoin going from zero to 40, 000 or something at the time, uh, at the time of recording here.

but I believe that The people are vastly underestimating what can happen in the next 12 years, because 93 percent of the bitcoins are already mined. So we'll mine about 6 percent of the total supply in the next 12 years, which in comparison to the first 93 percent is just Minuscule, right? And then the final half percent will be mined over the next hundred years.

So the SAT squeeze is real. And people seem to underestimate this thing so much because, I mean, the human brain is just not wired to think in exponentials. And this is like, uh, an inverted exponential, if you will. [00:14:00] what are your thoughts around that? Like, are the, is this how it works? Like, is all we need a higher percentage of hodlers versus traders?

Dylan: Yeah, I mean, I think trade, like, so called traders are just a natural consequence of Bitcoin's monetization. Um, you know, they, it's, I mean, a lot of the trading is just a wash. you know, like, it's, like, it's for liquidity's sake, you know, like. I guess it's, it's a good thing on, you know, if you want to move a hundred million in and out of the Bitcoin market in a day, you can, but for the average person, yeah, like it would be a different, the equation would be different, although still it would be negative some given the trading fees.

Like, like on average, not for an individual, there's brilliant traders and risk managers. And obviously that's not, you know, everybody can't be a hedge fund manager as their day job. And even there's many hedge fund managers that will lose money, obviously. [00:15:00] Um, but if you just account for one trading fees, so let's just say this is like an oversimplification, but let's just say it's 1 percent on each side of the buy and sell, or like even 10 basis points, you know, 0.

1%. You know, that's net negative. That's a, that's a, you know, a negative some game on average, right? Because the exchange is attracting some. And then you account for uncle Sam, right? Who doesn't, you know, if you're, if you're selling for a loss, you can obviously, you know, maybe account for some of that, um, and carry over those losses, but you account for the gains and depending on where you live, they take 20, 30, 40, 50%, um, and then, you know, you make a bunch of money in dollar terms, but in, you know, Bitcoin terms, you have to be.

Masterfully skilled, manage your tax, uh, your tax burden, your cost basis. Maybe you use some derivative hedging instrument to not affect your cap, your cost basis and extend, and then, you know, instead just like, you know, hedge off some risks. But then again, it's like, you're getting into all these esoteric games.

You may be, it works, maybe it doesn't. So hodling is, is the [00:16:00] best, you know, for, for most people. If you think about what the next 10 years looks like in terms of performance. Well, it's, you know, it's pretty much impossible to go from, you know, to see the, the relative performance that you saw from a buck to 40, 000, um, or even a hundred to 40, 000.

But, um, you know, the, you know, could we see another decade of 30, 40 percent compound annual growth or, you know, even less like 20 percent and that Bitcoin is still the best performing asset. Um, yeah, of course you could. Um, and I think that the more. You, the more you grow the, you know, as Bitcoin hypothetically turns from a 1 trillion or $800 billion asset today to 1,000,000,000,005 trillion, 10 trillion, well, all of a sudden the leaps and bounds from 10 to a hundred trillion are less about the BTC numerator and more about the USD denominator as we accelerate this process.

Um, and that's, that's not a calculation people are really accounting for. Um, I mean, the first part of Bitcoin's monetization was very much so just Bitcoin. [00:17:00] Inflation's 2%. Yes, M2 is going up more than that. Yes, asset prices are going up more than that. Then COVID 10 happens and the, you know, M2 explode, they helicopter money on corporations and individuals, QE, infinity.

And you know, Bitcoin goes up a bunch, crashes, but right. It's like, wait a sec, like, yeah, Bitcoin went up a ton. It was the best performing asset. You know, 10x or 20x from the low of the cycle, but still they printed a bunch of money. And so whatever the next cycle happens, who knows? Is it diminishing? Is it not?

Is it a super cycle? Is it not? Like, again, no one knows. Everybody's just guessing. But would I, would I be surprised about another 50, 60, 70 percent drawdown? Absolutely not. Humans are, you know, they're very much cyclical. Human psyche and behavior is very much cyclical. Which is why we get business cycles and economic cycles and asset booms and busts and drawdowns.

and so, yeah, like Bitcoin probably doesn't go up as much as it did in the previous cycles, but the amount of [00:18:00] actual capital that's flowing in is obviously orders of magnitude larger than it's ever been. And there's not that many coins going around. I mean, you're always going to see, right, that the idea of the hodler is a strong one and it's true.

We can see it in the data. You can, like, I can feel it when I talk to you, you guys on a podcast or Bitcoiners on Twitter, Nostr. But we can also see it in the data. Yeah, like 70 percent of Bitcoin hasn't moved in a year, 50 percent of Bitcoin hasn't moved in two, there's more long term holders than ever, you know, like 90 percent of coins haven't moved in three months.

But these are all like unprecedented things. Um, so as capital floods in, naturally, the exchange rate goes up and naturally, HODLers rate, like you're not selling all your stack. I'm not going to sell. I'm, you know, definitely not selling all my stack ever, but if Bitcoin goes up by an order of magnitude or nevermind an order of magnitude, it goes up by 5x or 2x or 3x.

Right? Like maybe do I peel off 1 percent of my stack and, treat myself or get the thing I've always wanted for a decade [00:19:00] or get my mom something nice or whatever it is, right? Yeah, maybe, maybe with 1 percent or 5 percent of my stack. And guess what? Like we see that on average in the data when Bitcoin's price goes bonkers, the people that were in the depths of the bear market getting their teeth smashed in, you know, down 70%, down 80 percent stacking.

That same cohort takes a little bit off, right? And they peel a little bit off at the top and they slowly distribute a little bit. And that's in tandem with this flood of capital coming in and Bitcoin's price goes parabolic. And eventually the marginal buyer gets a little exhausted and there's so much leverage built up in the system.

And it kind of bursts and we see, you know, that 30, 40, 50 percent water, waterfall, watershed moment. And, you know, Bitcoin's dead again and we repeat it all over again. Right. And that's when the new group of HODLers that are saying, whoa, you know, that came in in 2024, 2025, like 2023, you go, whoa, this Bitcoin thing's really important.

And it goes up a bunch [00:20:00] on them and they're like, wait, it's more important than I even thought. And all of a sudden it blows up in their face and they spend two years, you know, two, three years accumulating, like, and I think we very much see this cycle. We've seen the cycle repeat over and over again, and every single time Bitcoin is.

More entrenched, it's more liquid, it's bigger of an idea and, uh, the, the hodler base around the world is more of a powerful, not political party, if you will, but more of a powerful kind of decentralized global, unit of like autonomous sovereign individuals, right? They're saying like, Hey, like treat me right.

Uh, if you don't treat me right, I'm going to take my capital elsewhere. I'm going to, I'm going to move elsewhere. I'm going to relocate. And that is, you know, very powerful, uh, you know, that is, that is the second and third order effects of that, kind of in tandem with this like sovereign individual thesis is very powerful on a long timeframe, right?

Especially as, as, you know, Bitcoin continues to appreciate [00:21:00] just because of supply, like it's very simple, right? Like, like, you know, we can over explain it as much as possible to whoever. But all it takes is a simple supply demand chart, you know, that you saw in like freshman year economics in high school, right?

It's like very, very much simple why this, this story will continue, why, you know, why there's going to be no secular top for Bitcoin. There's not going to be. This one final peak and then it all, you know, the story was great, but it all comes crumbling down. It's like, what, what causes this story that's been proliferating this, this idea, this network that's been proliferating since 2009 to stop?

That's the real question everyone should be asking. Um, because yeah, there could be lapses in momentum and drawdowns and hiccups and speed bumps, but what's, what causes this idea to stop and actually reverse? And there is no answer. Uh, and there is no good answer to that. Is

Macroeconomics in a Hyper Bitcoinized World

Knut: No, uh, but on that note, and this, uh, all, uh, History rhyming, but not [00:22:00] repeating, sort of, kind of, we go in cycles, and, uh, you have a bull market every now and then, every four years or something, it sort of coincides with the halving somehow, and all of that stuff, like, there eventually comes a point where the last bull market happens.

And I don't mean that in the sense of Bitcoin crashes and goes away, but the other thing happens. Like, people may learn slowly, and we may have like tens of these bull bear cycles to it. to play out before this actually happens, but eventually if this thing works and if people get it, there will come a point where we're in the last bull market that just goes absolutely bonkers.

It's not numbers, number go up anymore. It's number go absolutely crazy. And in this bull market, all the wealth of the world flows into Bitcoin and there's no stopping [00:23:00] it. Like it. Is that the way you see things too, that that point is inevitable at some point as long as this thing just keeps on working?

Dylan: yeah, I see it like that, but I think there's going to be more of a back and forth fight, if you will. Uh, not in the sense of a fight as, uh, you know, Elizabeth Warren introduces some BS regulation or, you know, bill into Congress. But more so if you think about, you know, like crappy currencies have existed against the dollar and gold for a long time.

And they, and they, you know, like the Argentinian peso continues to devalue every single year against the dollar and it still exists, right? And it exists because of political mandate and fiat, of course, you know, and the, the arms of the state and enforcing it, your taxes to be paid in it, et cetera. But, right, like there's long dated fiat liabilities 30 years out.

Right. So, you know, even longer than that, if you're thinking of pensions, entitlements, you know, yada, yada. [00:24:00] So, I think it's very likely, um, and, you know, hopefully not, maybe not, um, if we're thinking about, you know, how, how this thing can go exponential and how technology's, you know, uh, adopted and, you know, maybe I'm the guy that's saying, Hey, just maybe like, You know, the horse and buggy or the, uh, like, or some, some other sort of like, you know, tech analogy like that is still around and relevant, you know, 10, 15 years out, 20 years out.

But I think there's, there's a world where Bitcoin is the dominant unit of the dominant global settlement rail. It's the dominant store of value. It's 10 times larger than gold. And the dollar can still exist as a form of, you know, a form of currency, if you will, as a form of basically just the last arm of government and, and it imposes actually a fiscal austerity and a fiscal form of, uh, maybe not austerity, but a form of, uh, you know, [00:25:00] sensibility, um, austerity, um, you know, just more, more so just, Kind of, it pulls everyone back a little bit and says, okay, wait, we actually have to be.

Cognizant of, of this whole path. And so in the same way that you see, like in emerging markets, they'll jack up interest rates of time to defend their currency against speculators. Well, you know, people don't like to think of that, but like Michael Saylor is the most pure example of this. When you think of like, okay, he's going to borrow a billion dollars of, you know, he's borrowing a billion dollars of convertible notes at zero, right?

And he's giving people an option to sell equity, uh, or just, you know, borrowing at zero and paying seven years later. And then he borrows 600 million in the junk debt market at 6%. Well, you know, at a micro scale, right? Like, Let's just say, and I don't, but let's just say I have, I have a hundred thousand of student debt.

I don't. I took one year of school, had good grades, have no debt, but let's just say I was the typical Zoomer, right? And I had a hundred thousand or whatever of [00:26:00] unsecured student debt that I can't default upon at 4 percent interest or 5 percent interest or whatever it was because it was a few years back.

Well, you know, I'm a, I'm someone that thinks for the long term. I, instead of paying down, you know, my student debt, I make The decision that, you know, that my 60 year old financial advisor may say is risky. But I, instead of paying that all down in principle, pay the interest, pay a small amount of principle.

But I'm stacking Bitcoin, right? I'm stacking Bitcoin, putting Bitcoin away, stacking for cool storage. Well, am I borrowing money to buy Bitcoin? No. But instead of borrowing that, instead of paying that debt off, I'm aside, I'm, I'm deciding in instead of, eliminating the liability on that, on my side of the, on the liability side of my balance sheet.

I'm acquiring a Bitcoin denominated asset on the asset side. So indirectly, right, like dollars on my personal balance sheet are fungible, right? I understand, right, like if you have a mortgage per se and you don't pay that fully off and you buy some Bitcoin while still having that mortgage, you're not borrowing [00:27:00] money to buy Bitcoin.

But instead of extinguishing that liability or acquiring the Bitcoin denominated asset, In a way, that's, if you think of, you know, your personal balance sheet as fungible, you're borrowing money to buy Bitcoin, right? Instead of, it's, you're, you're deferring, you're paying interest on that, and you're acquiring a Bitcoin denominated asset.

So all of us, any of us that have Bitcoin and debt. are acquiring the Bitcoin asset and ignoring the dollar liability. And that at a societal scale, um, as this thing continues to, as this economic system continues to, you know, require perpetual credit expansion, as these historic debt levels continue to require financial repression, you know, inflation above interest rates, because that's the reality.

I mean, the last, the last year aside, they're going through this Titan cycle. Everybody's thinking all is well, but it's, it's unmanageable. So they need more inflation. They need more units in the system. It's just a fact. It's just a math. It's a math equation. It's not even a macro equation. It's a math equation that you have to inflate away the currency.

And so from, [00:28:00] from, you know, this, if you're thinking about how the dollar, and I would say the dollar is the strongest, obviously, of all the other currencies, the euro, the yen, the yuan, the ruble, whatever currency you want. But they can very much exist, but they'll be. You know, if not like, not to say worthless, but near worthless on a year over year basis forever, right?

Uh, and there will be volatility, of course, as these, you know, these dying systems kind of fight back in the form of interest rate, like, rate, and everybody knows that the rate, rate, uh, hikes aren't sustainable. Like, every tightening cycle, we, we go through this, like, they raise, they raise rates, it's like, okay, all is good, and then, boom, something, something breaks, right?

Like, tech bubble, 80 percent drawdown, 50 percent drawdown in equity indices. Not even like, not even big tech. 50 percent drawdown when they raised rates in the tech bubble. They're like, okay, shoot, how do we fix this? They literally said, the Fed Greenspan was like, we should blow a housing bubble. [00:29:00] This is in the Fed minutes.

This is what they were saying in like 2002, 2003. Housing market comes, they raise, they raise rates because inflation starts to roar, oil's going bonkers. Boom, leverage, collapse, you know, great financial crisis. Once in a hundred year catastrophe, they cut rates to zero. They get rates up to two and a half percent in 2018 2019.

For the corporate bond markets like, oh boy, we have a big problem. 2019, they're already cutting rates. Repo market blows up. They start expanding the balance sheet before COVID. BlackRock's like, Hey, next down cycle, we need to go direct from governments to households with stimulus. Cause we've done a decade of rates at zero and when rates are at zero again, we're not going to have, they're not going to have any sort of leverage.

We're not going to have any sort of. Like oomph for our easing. So we're going to need to go direct to households. Six months later, COVID, 10 trillion in the system. So like this, this reality that yes, there, there, there needs to be perpetual credit [00:30:00] expansion. Yes. The dollar is going to continue to devalue against everything you care about.

True. But there's always going to be, I think, and as Bitcoin becomes more valuable, it's going to play a bigger and bigger and bigger and bigger role and more directly. Represent the, the devaluation in fiat and the devaluation of the dollar more purely, I think, in my view, right? Instead of just being this uncorrelated thing, that's just booming and busting.

When Bitcoin's a 10 trillion asset, when Bitcoin's a 50 trillion asset, hypothetically we're in this world, it's going to tick for tick match the market's expectation and the actual dollar devaluation in the system. And that's, and that's what you can expect. Right. It's going to be this pure gauge of, of calling, calling the systems bluff, if you will.

Right. It's like, Oh, you want to, you want to print a trillion dollars for this BS stimulus plan? Great. Bitcoin gaps up 10 percent on the news. Right. Like that's, that's the game that's, that's playing. And I think, you know, the question of like, is dollar going to [00:31:00] collapse tomorrow? Like, right. You know, I don't, or not tomorrow, but like in this decade, like, yeah, in purchasing power terms, of course it will against Bitcoin.

Um, but I, I think the dollar can still exist with Bitcoin, uh, and the Bitcoin can be worth a hundred trillion and it can still exist. And like, that's, if that's not something I'm rooting for or not, I think it's just the reality that like we can all, you know, at some point, yeah, it'll be gone. Um, but like, what's the path to get there and how long does it take?

That's anybody's guess.

Knut: Yeah, that's the, that's the trickiest question, right? With all of this is the timing of the stuff, but the facts are still there. Everything drops to their marginal cost of production, and the marginal cost of production of a dollar is zero. Like, it's literally, uh, it costs you nothing to print a dollar if you have a money printer, and that is not the case with Bitcoin.

The marginal cost of a Bitcoin goes higher and higher every year. So, that's it.

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Financial Services after Hyperbitcoinization

Knut: If we extrapolate into the future for a while here and try to explore what's the role of macroeconomics in a hyperbitcoinized world, if we just take that for a fact that everyone on earth uses bitcoin as their main medium of exchange, is there such a thing as a hedge fund in such a future?

Is there a need for a [00:34:00] financial sector at all? Or what is a company in such a future? Like, I'm trying to imagine this, if, if, if there's no interventionism anymore, so you don't have, say, imagine this fictitious scenario where you have no inflation, no taxes, or little to no taxes, or they're mostly voluntary, so a company is really just a telegram group, and we're all on a Bitcoin standard, and we can all trade globally, Is there even a need for a financial sector in such a world?

Dylan: You know, the idea of macroeconomics and, you know, this whole, you know, reading tea leaves financial sector is very much gone or greatly diminished, uh, when the money is.

It's an apolitical, uh, you know, neutral programmatic network, um, and I agree there. Uh, but I, I think that, you know, when you think of the financial sector, um, it's, you, you eliminate the quintillionaires, you eliminate the, [00:35:00] the idea of those being closest to the money printer kind of, um, benefiting at the cost of everybody else.

Based on having,

Knut: Cantillon effect.

Dylan: yeah, exactly. You eliminate that. But I think the financial sector in the form of, right. So like the last question you asked, like, is the dollar, and you didn't say this exactly, but you're like, is the dollar going away entirely? And I didn't push back, but, you know, maybe offered a bit of, uh, a different view saying, Hey, maybe it doesn't just go away entirely.

And they, the two exist in parallel for a lot longer than most of us believe, including. Myself, you know, a couple of years ago, maybe I wouldn't believe I'm saying this, but here, just, here's an idea, right? Like, if you look at the, the, like, whether it's the most unbelievable hyperinflationary event, or, you know, the dollar just steadily devalues 3, 4, 5 percent a year, Bitcoin goes up, 10% compound annual growth for a long, long time.

Right. It could be like, you know, or any of the kind of scenarios [00:36:00] you, you assign. Right. Um, what, what do you do in a world where the currency is manipulated and devaluing and probably the interest rates below the rate of inflation? Like what do you, what do you do in that world? Well, I would say, and if you like study like the hyperinflations or the high inflations.

The people that got the richest, and not that your goal should be to get rich or not, but I guess maybe the people that preserve their purchasing power, one of the things they do is they borrow in the weak currency, long deal liabilities, whatever it may be, however they may be doing it, and acquiring hard assets.

Like one of the richest guys in Germany, Hugo Steines in Weimar. He was borrowing in the German mark and acquiring industry and acquiring gold and speculating, right? So it's, it's like, well, what's the need for financial services? And it's like, okay, let's just look at the Bitcoin companies, you know, mChain, Swans, you know, blah, blah, blah, blah, blah.

Um, well, like, and [00:37:00] I saved just those two. Because they have dollar lending, uh, facilities where you can post your Bitcoin and people say, Oh, well, you know, borrow against your Bitcoin leverage. That's super risky. It's like, yeah, we'll evaluate your own risks. But the fact is, and I don't think people understand this, Unchained has had, and Swan, I think just recently launched theirs.

Unchained has had a dollar lending facility against Bitcoin since 2017 and the interest rate's high. Yeah, it is. Um, so if you can get, you know, a cheap cost of capital elsewhere without collateralizing your Bitcoin, fantastic. Great for you. Um, but the reality is this world doesn't require, I don't need a credit score, right?

I give you 2, I give you 20 bucks a Bitcoin or 25 bucks a Bitcoin or whatever it is. And I, depending on how much I give you, uh, it affects the rate I get, right? And hypothetically in this world, but I borrow 10 based on my 20 bucks a Bitcoin. Or let's just do it in Bitcoin [00:38:00] terms. I give you two Bitcoin, 40, 000 pop, and I borrow 40, 000, right?

That world, that system, Unchained has never seen a loan default. Their loan book is a hundred percent. They've never seen a default. Like how, how is that? That's like unbelievable in the world of legacy finance. The recovery profile is a hundred percent and it takes two minutes, right? What's the recovery profile on subprime auto loans?

What's the recovery profile on commercial real estate? Right. There's, there's not nothing like this exists where I can liquidate you in an orderly manner. But before that I can say, Hey, do you have more collateral to post? Hey, can you pay some down? Hey, Bitcoin's exchange rate dropped, right? So in a world where the dollar still is around, yeah, financial services will exist, right?

Hey, I have a bunch of Bitcoin because I've been accumulating for years. I would like to buy some Apple stock, or I would like to buy some micro strategy stock, but I don't want to sell my Bitcoin because I don't want to pay taxes. Um, and I don't want to, or I just don't want to [00:39:00] relinquish my hodl. Right.

It's like, okay, well, Hey, put some Bitcoin in the brokerage account. You can borrow against and you can buy some Apple stock. Right. It's like, that's, that's something that I would find valuable. Um, and so financial services absolutely will exist. Um, just yesterday, two days ago, I think a week ago, and I posted about it and I kind of, uh, was, was bearish on it, but Sam Altman, right, who, uh, you know, open, open AI CEO, got ousted, came back famously, uh, is the, the world coin, you know, distilled world coin, very dystopian idea, uh, is like one of the co founders there, uh, but just recently announced, you know, a hundred million dollar private Bitcoin credit fund.

It's like, okay, what does that mean? And it's basically. What Genesis and a bunch of the Bitcoin, uh, yield companies were doing a while ago, right? Where they're looking to get Bitcoin's denominated yields, and they're going to be taking directional risks to do that, of course. And it will blow, I said, likely to blow up at 2026.

And it was kind of tongue in cheek, kind of satire, but also serious, right? Because the risk free rate [00:40:00] of Bitcoin is zero. But again, right, in a world where there is no, there is no risk free rate, there is no fed funds set by a board of, you know, 12, 12 men in a, in a room, right? Well, then, then you're free to do whatever you, you, you may choose, uh, in that world.

You're free to go to a financial service company and borrow and get dollars. You're free to, you're free to, you know, directionally chase yield and it's not yield. In the same way that, like, there's risk in investing in junk bonds today, right? If I want to get a 10 percent yield, I can buy, like, IBM bonds, but they might default, right?

So, like, I think financial services will absolutely exist. It's just about the, the, the bedrock or the, you know, structure it's built upon. Uh, it's not built upon, and there'll, there'll be many failures and there'll be many collapses and there will be many fractional reserve operations that all collapse.

And FTX [00:41:00] collapsed, and All the Bitcoiners. I went to Pacific Bitcoin, November, 2022, two days after FTX collapsed, and it was the most happy, not happy in the, in the form like FTX collapsed, like, Hey, let's party, but no one cared. Everybody was bullish. Everybody was, was super optimistic about the future. And then I talked with some of my crypto friends and was talking to those people in those circles.

And they're like, and even the macro people that I also am in the same room with, um, and I talked to frequently. And the sentiment was like, it's over, man. It's so over. Like it's done. There was a good run, you know, we tried it. Crypto, it was great, but like, back it up, go home. I was like, what? Like, do you guys, are you guys like seeing the same thing I'm seeing?

Like, this is a, the guy was a fraud. Like, like, this is great that we got him out of here. Um, and so I think that we'll see that story repeat over and over again. Uh, but then the need for [00:42:00] like quality financial services, right? Uh, like, especially in a world where the dollar exists, right? In a world where the dollar exists, then I don't ever want to sell my Bitcoin because I'm going to have to pay capital gains taxes.

And like, I'm a US citizen, so I pay tax no matter where I live, anywhere on the globe. Um, and, uh, and to escape that, I have to relinquish my citizenship. So do I want to do that? No, I don't want to do that. Maybe we'll, I want to do that in the future. Sure. But like, I'm going to pay my taxes because I don't want to go in prison.

Right. Obviously, um, as would any logical, rational person. So in that world, like, I don't have interest in selling my Bitcoin. I'm just going to, if I need to borrow against it and invest it. Right. But in a world where Bitcoin's a unit of account, then like, sure. And, and there is no dollar, then like, sure.

And then it's legal tender. Like I'll invest Bitcoin. Uh, and to the stock market to acquire Bitcoin denominated returns, or I'll invest in a, you know, Bitcoin value fund, or I'll put, you know, I'll buy a laundromat to cash flow in Bitcoin terms, [00:43:00] right? Like, you know, it's just that world right now, and I thought deeply about this, you know, I have Intelligent Investor by Warren Buffett back there, like.

The value investing world, like why is value underperformed for two decades? And like some of the smartest people in macro and investing don't get it. They're like, like, you know, like Warren Buffett, like he's, he's done well just because he, you know, punted Apple with massive size. 10 years after Apple had already won, right?

And he's made, he's made boatloads of money, but besides that, like value is deeply, deeply, deeply underperformed for two decades. And, you know, I would posit that, Hey, maybe like your, your ruler keeps changing. Like you're, you're saying like, Hey, this is, this is valuable. This is, this is a good use of my capital.

And you continue to underperform the people that just punt Nasdaq at any price. Hmm, you know. Well, I wonder what could be the cause of that. [00:44:00] And the exciting thing for me is that value investing, you know, real finance, economics. Real economic calculation returns in a world where, where the money isn't broken.

Um, so that was a long winded. I kind of threw a lot at you there, but I think that's, that's what I'm thinking about.

Knut: Yeah, yeah, I don't believe that, uh, financial services nor the dollar will go away anytime soon. I'm just trying to, like, I'm fishing for what happens after that. Because that's, that's the part that I find interesting to, like, that I, it's my hobby to think about, like, what happens after hyperbitcoinization.

And speaking of, uh Buffett and Munger, just on a side note here, uh, I read an interesting theory about them that they're They, the reason that they were so against Bitcoin is because they're, they might not be, might not have been as ignorant as we thought. They might totally understand it, it's just [00:45:00] that the current system plays into their hands very much, like, the dollar is beneficial to them.

They're, they're on the receiving end, uh, of that, you know, uh, wealth distribution from the poor to the rich. So, uh, yeah. What I think, yeah, I think the financial sector will, uh, be reduced to what's absolutely necessary at some point. But I'm curious as why, about these long term, like, the things you explain, they're very, like, to me, it's very sound and it's things that, uh, people should be aware.

of, and they should prepare for what's coming and stuff, what's happening, like, in a near to midterm future.

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Longevity of States as Institutions

Knut: But like, I'm just curious, uh, what do you think, uh, has the most longevity, or like, what do you think disappears first? The US, the UK, the EU, or China? which one has the, the, the, uh, longest survival rate?

Let's throw El Salvador in there for [00:48:00] Uh, because why not

Dylan: I mean, I would say probably, uh, you know, China or the EU in the sense of, um, and, and by the EU, I don't mean like societal collapse. I mean. I actually, like with, as a, um, you know, a bit of, especially the last 12 months, I've become like more of a history buff than I was previously. And I still need to touch up on a whole lot of stuff, but I spent the last couple of years traveling a little bit around Europe and the unique culture, uh, and the language and the deep history and all these places is super, super fascinating.

The architecture is beautiful. I mean, you know, I lived somewhat for most of my life in a very much American bubble. Um, so seeing Europe was like very much, uh, just, you know, eye opening. Um, so, you know, the European Union will persist and thrive regardless of the demographics and all this, you know, sort of stuff.

Without the EU, a hundred percent, without this, you know, sprawling [00:49:00] bureaucracy of, you know, um, kind of project managers that are trying to take away everybody's rights and freedoms. Um, so yeah, I mean, I would, I would very much like to see that, uh, return, you know, sovereignty returned to the individual nations in the, in the

Knut: yeah, yeah, but, okay, okay, let me stop you right there, because, like, yeah, I think Europe as a concept has a very long survival rate, but I'm talking more about these institutions, like, US government, and the EU, and those structures, and The, the CCP, if you will, like these bureaucratic and like entities that we call nations, which one dies first?

Dylan: I don't think it's the U. S., um. I, I mean, they're, uh, you know, the U. S. is obviously very, very powerful. Um, I think just the, the, the structure of, of state rights, under kind of one union is a little bit, is a, is a, is a great system. Obviously, I mean, like the U. S. [00:50:00] Yeah, we do have a billion guns, so any, any sort of over, uh, you know, the government oversteps you, there is that ultimate backstop.

Um, the CCP has, you know, this obviously, this digital panopticon surveillance state that's highly technical, um, and it is kind of built on the backs of Uh, you know, industrialization and never, ever, uh, you know, ever expanding debt burdens. Um, and so, you know, who could have, like, who would have thought the Soviet Union would have collapsed, you know, in the height of the Cold War?

You know, if you said, hey, the Soviet Union is going to collapse in 15 years or 10 years or 7 years, like, who would have believed that?

Knut: No, like, uh, if I may interrupt you there, Dylan, because this is sort of why I asked the question, because I lived through that. And I lived in a quote unquote neutral country. So, so, uh, my entire upbringing, I was Uh, taught in public school that

the, [00:51:00] the U. S., the, the U. S. and the Soviet, that, like, that's the Cold War. You have this balance of power between capitalism and socialism. And, uh, the way we were taught in schools, that it was like, these, these were two Different systems, but they're sort of equal in terms of worth. Like, so, so this system is just as sustainable as the other.

And, uh, we'll see what happens, but they're sort of equal. And that's what everyone thought over, uh, back in Sweden in the 80s. So, so no one saw the, the fall of the Soviets coming, and, and, uh, like That's why I'm so, so fascinated about this because I don't, I don't think anyone ever predicts empires falling, like in hindsight it was obvious because the Soviet Union was basically just a giant prison for 70 years and people were starving and not doing shit, so it had to collapse at some point because it was unsustainable, like totalitarianism doesn't work in the long run, [00:52:00] uh, but I think it's a little harder to predict with Pseudo The, the powers that be today, because we're, like, here in Europe, it's sort of like the East is the new West, because the, the, the former Soviet states are much more inclined to, to, uh, you know, not doing what they're told and to disobey whatever the government says.

Well, whilst in the West, uh, in Western Europe, everyone was putting on masks and taking booster shots as soon as anything was said about that thing. Like, it's like, of course, virtue, virtue. Um, so, so I think the West is on the same path as the East used to be, and the East is on the same path as the West used to be.

So there's some pendulum effect going on over here.

Dylan: No, that's a great point. Um, and I mean, obviously, uh, you know, being under communist rule will do that to you. Uh, the collectivism in the [00:53:00] West is, is worrisome, obviously. I, I understand it and sympathize with it. I obviously am very much against it, uh, and allocate all of my time and capital to not, to insulating myself from it, obviously.

Um. But, you know, some of these, these macro, you know, uh, forces, societal forces are much too large for an individual to overcome or change completely. We're kind of, um, at the whims of, of these shifts, uh, is obviously, but I mean, if I think of like, Obviously that communism as an idea, uh, and how it's presented and how you view it, like how the media presents it is obviously, it seems much more stable than it actually is.

Um, so that's one thing. And I think, you know, so like, that would probably be very much bearish on, on China as this As this project, uh, you know, we see all the, like, what is it? The, the ghost cities, right? These, these things that were constructed and, and, you know, the GDP [00:54:00] number go up, right, when really like nothing of long term value is, is, is produced.

Um, but I am a little bearish, um, and I don't have, you know, a catalyst per se, or. One event or even a timeline, but the Euro has an idea, right? Like everybody's like, Oh, Bitcoin is this experiment. It's like, no, well, yeah, sure it is. But so is the Euro, like, like the Euro taking all these sovereignties. I don't even know how many countries is that?

Like, what is it? 15, 19, something, how many countries are using the Euro? Um, and you know, I think I just went to Croatia for a month. Uh, I was in split Croatia for a month in October and they just recently started using the Euro. Um, but you have this model where the different demographics, you know, uh, and, and.

the productivity of these states, like, you know, the Italy and Spain and Greece and Portugal, um, are kind of these tourist hubs with not great demographics while Germany is, is subsidizing everybody, but also this manufacturing hub, um, that's, you know, benefiting because of the, the weaker currency, um, than would otherwise [00:55:00] exist in a manufacturing hub like Germany.

And obviously, you know, the Russia Ukraine war, the natural gas, like, so I, I see the Euro and the ECB structure splintering a bit. And I think eventually, uh, a lot of these nations, um, realize, or, you know, I think there's going to be a lot of populist, uh, sort of far right, if you will, tides, um, this decade.

Knut: type things.

Dylan: Yeah, I think it's, it's, it's a natural, I mean, this is a bit more political than just, you know, economic or even philosophical, but. You know, the, the nationalist, um, kind of like right rising, um, is, is a natural reaction. It's a natural immune response and not that it's, you know, but, but like pushing unfettered immigration and these, these, you know, overarching demographic changes and.

And, you know, basically like labeling anybody that doesn't like say like, yeah, you know, this is obviously great. Uh, you know, changing like hundreds of [00:56:00] years of, of history and culture. Um, like calling anybody a bigot that doesn't want this stuff, you know, or labeling them as like far right extremism, not just in Europe and in the US, but like, it's obviously a different story.

Um, the details. Uh, this is obviously like, it's, it's very much similar and it's happening, it's happening everywhere, right? Um, and it, and it results and it's manifesting in different ways. But I think you see that this decade, especially, and this is, I mean, this is what

The Pendulum Effect

Knut: the backlash, backlash is already here. I mean, and it's connected to all of this stuff, like Woke Disney and the MCU and all of this stuff. It's also getting its long overdue backlash now. And so all of this Woke stuff and calling anyone who doesn't agree, uh Uh, a Nazi, uh, it's getting its overdue.

Backlash? Yes.

Dylan: Yeah, [00:57:00] well, I, I think we, we very much agree there and it's, it's more so just like the pendulum always swings back. Um, so, you know, when you, when you try to push people, the populace, you know, the tide of what's considered mainstream or the Overton window or You know, uh, this far left or, you know, this far right, but you, you push a pendulum one way.

You know, there is an equal reaction on the other side of that. And I think that's what we're seeing, um, we're starting to see. So, uh, you know, that, what does that lead to? Does that lead to the splintering of an EU? Does that lead to the splintering of a Euro as a construct? Like, again, who knows? And none of this happens next month or next year or like, but it's, it's a slow, it's a slow process, but it's a gradually then suddenly process, I think.

Um, and, you know, we're in one of those time periods, like there's. There's decades where nothing happens and, um, or I, there's a saying there, um, there's, there's decades where years happen, or I don't even know the saying, but we're in the, we're [00:58:00] in the years where decades happen now, um. And, you know, certainly we're living in interesting times, um, and so, you know, and a lot of this I think is very much intertwined with these, uh, you know, these debt cycles, right?

These 80 year debt super cycles, these, these, uh, you know, the rise and fall of these powers, right? I think everything's very much intertwined and connected. Um, and the West, uh, Assis Global Hegemon, uh, is obviously still, you know, the U. S. and the West, broadly, NATO is obviously still the power at large, but if you just rewind to 20 years ago, right, or like, let's just say post, Post collapse of the Soviet Union, 1990s, right?

The U. S. and I guess just the West, broadly, was the largest absolute and relative hegemon the world has ever seen in recorded history. From a political, military, technological, um, standpoint, financial, there had never, there [00:59:00] had never been a larger relative or absolute power in the history of the world. Um, and that, that hasn't crumbled far from it, but that relative power has shifted, right?

Where, where 30, 20, 30 years ago, you couldn't, you, I guess, like 25 years ago, you couldn't have imagined a nation or a coalition of nations, you know, not really like kind of laughing or, or like, you know, turning away from the U S right. Or, or, you know, like OPEC and Russia, right? Like coming together and.

And talking oil while the U. S. isn't in the conversation, like that is, is, is, you know, unimaginable, or trading in yuan, like these sort of things. Right. Um, and that happening kind of tells you, like, about the state of things and not that collapse is like absolutely imminent, but more so that the, the power, you know, underneath the surface has been relatively, relatively shifting.

Right. And so, you know, what, what results of this, [01:00:00] like culturally, militarily. Financially, right? These are like huge, huge questions, but I think, you know, a lot of this coming to the head at the same time, like it's certainly not a coincidence.

Knut: No, uh, you said, uh, a thing about, you know, Germany subsidizing the pigs countries. Uh, the, this is the, the, there's a funny way to look at that, and that is, uh, you know, Germany makes all this money from making mercedeses and BMWs and whatnot, and orders and selling them. To, to Italy, Spain, Portugal, Greece, uh, uh, it's just the, the problem is just that these countries can't afford them really.

So they take on a lot of debt, and then Germany has to bail them out. So what's really going on is that they're getting the BMWs at a discount. Uh, through, uh, through, uh, uh, uh, a [01:01:00] giant maze of bureaucracy, but that's what's really going on. So it's your redistributing resources. So the Germans think that they get well paid for their BMWs, but in reality, they don't because they have to pay the debts.

And yeah, now they have other debts to pay as well as we move into the next decade, but that's another story for another time.

Dylan: The, the European economic model is, is always fascinating to look at. And it's always, every once in a while I catch myself, uh, you know, whether I'm in the debate myself or, uh, you know, just reading third party commentary of like someone comparing like the economic model of like, you know, a Scandinavian nation with the U S.

And they're like, But they, look at their healthcare, or like look at their, look at their, you know, look at their murder rate, or like, and I'm just like, oh, you know, you're comparing a small homogenous nation, you know, in the European Union of six, six million people, uh, to this sprawling landmass of 360 [01:02:00] million, uh, you

Knut: Yeah, yeah, okay.

Dylan: It's like, it's just a, it's always, it's always an interesting convo, um, where that leads. But, uh, yeah, no, I, I agree.

Knut: And if, if Sweden was a state in the U. S., we would be in the top, uh, in the bottom five states in terms of GDP. So, so there's that. And, uh, also, like other interesting facts, uh, Democrats promote this, uh, Scandinavian model to be, so, so, like a role model for the rest of the world. But the thing is, in Sweden, who has Where the model sort of comes from, uh, 49 of the 50 biggest companies were founded before this whole thing started.

So the models have done nothing but, you know, extract the wealth that was already there and sort of put all the countries on the wrong path. Uh, so, uh, [01:03:00] it's really kind of depressing that it's getting promoted as something that it isn't. Because it's just a giant cost at the end of the day.

Dylan: And not to mention, like, and this is a much larger convo, but the, the whole European economic model is, you know, uh, that's like, like NATO, like the U. S. provides their security budget. So it's like, if, you know, it's like, oh, you know, why don't they have free, why don't they have free healthcare? It's like, oh, well, you know.

The deal is the U. S. is the world's policeman, big brother, and, uh, you know, so all these European nations can have, can have this or that, and, uh, you know, without the, if they had to provide their own military and they had to, you know, secure their own trade routes, like, this looks like a different nation, obviously, but that's never in the discussion.

Knut: Then again, a big part of the relative success of the US compared to every other nation [01:04:00] state is just the fact that you went off the gold standard in 71 and therefore you can print things out of thin air and pay for everything. Like, give me your resources and I'll give you this fictitious shit. Like, that's the success story there.

And, yeah, I think It's depressing.

Optimism for Bitcoin's Impact

Luke: maybe to take us in a slightly different direction here, talking about things collapsing and all this, uh, is there an optimistic angle here? Do you, do you have hope for what Bitcoin can do for the world? What's, what's your view on that?

Dylan: Yeah, absolutely. I mean, I, I think it's, um, I mean, I tweeted this yesterday and have already mentioned the sovereign individual, um, you know, a couple of times today, but I, I believe Bitcoin as this, as this piece of, uh, you know, property, uh, or, um, this, this asset that, you know, completely returns the property rights to you, the individual, is a great forcing function for, um, for, for [01:05:00] governments and, and, you know, peaceful cooperation everywhere, right?

If, if coercion is, is via technology removed. from the, you know, bargaining table, this changes, this changes the power dynamic everywhere. It, it, it changes the, the logic of violence, if you will, right? Like, you think about like every war, like, you know, the tanks rolled in, they come and take your gold, right?

But if, if I, if, if you come up to me with a gun and say, I'm going to kill you, give me your money. And I say, kill me, you're not having my money. Right? Like that, that changes things. Um, and that, and that's never been, that's never, that's never existed ever. And so I present this to you as, you know, it's sort of a radical, uh individual, uh, example.

Right. But this is, you can extrapolate this at large. Um, and so, you know, nevermind that, like, but also, you know, what Bitcoin does with, with regards to, you know, the energy grid, um, and, and global [01:06:00] energy systems at large. Um, kind of chasing this, like, Kardashev, uh, sort of civilization where all energy is used as efficiently and effectively as possible.

Um, you know, this sort of broader idea of, of, you know, human flourishing is a derivative of our ability to harness. Uh, and capture energy efficiently, right, like, you know, say, you know, say what you will about the industrial revolution and its, uh, consequences on the human race, but, um, but it's, you know, if you think about living standards, quality of life, Um, you know, the average life expectancy, but if you are pro humanity, you know, you have to just accept as a fact empirically that energy, you know, uh, you know, producing and utilizing energy, um, in any form, um, you know, fossil fuels or, or not, um, is a good thing for humanity, right?

It's raised our living standards. Um, and you know, unless you're a [01:07:00] Malthusian, then you, you can agree with that and say that that's good. And so an energy money, an energy currency, a direct incentive to monetize all waste energy in the world. Every, every, you know, cubic foot of, of natural gas that otherwise would be flared.

Um, you know, and methane that, you know, goes to the atmosphere instead, if we capture it and combust all of that energy, right, around the world, and we use it to secure a fundamentally sound monetary system, like, what are the second and third order effects of such an idea? Um, and like, you know, there's only probably a couple hundred thousand people on the small corner of the internet that have actually pondered that idea.

Um, at a deep level. So like, that's really exciting. and like the, the, the consequences are profound. Um, and we obviously don't really know what the, what the result of all that is. So yeah, I'm, I'm super, super bullish and super optimistic. Um, but also I think like, you know, maybe the first half of the conversation or like the subsets of the [01:08:00] conversation where we're talking about collapse or maybe these more doomy scenarios are, are not a result of Bitcoin.

Um, it's, it's a result of, you know, decades, centuries of humans, central planning, uh, you know, the, the tides of history and, um, the result of. You know, this, um, this desire by humans to be, to be free and this kind of emergent system, um, while others attempt to control them and coerce them. And so this, this liberating technology kind of coming from nothing, coming from zero, coming from this guy in this basement that released this open source code that no one knows who he is, is what I've said multiple times is like the most powerful idea of our time.

Um, and it's why I'm all in on it. It's like. If Bitcoin fails, then like we have bigger problems. So like, I, I should just go all in because like, and not like, like, I'm not, and not to say all in as in like everybody listening, put [01:09:00] all your money in Bitcoin and don't think twice, but more so like when you really go think through it all and you think through like where this all is headed, the world, technology, politics, freedom, censorship, and you ponder that and you think, okay, well, if there's a world that.

This freedom technology, this open, neutral network can exist or doesn't exist. Or for some reason that I haven't thought through fails, what does that world look like? Like, if this fails, if this idea fails and whatever, you know, quantify or qualify failure as whatever you want it to be. But if it fails, then like, we're screwed anyway.

Like, so, like, I So, for me then, like, logically, like, I must, you know, wholly go all in because there's no other alternative. Um, so, yeah, that's how I think about it.

Knut: Yeah, it's a good thing to take this [01:10:00] conversation in a more optimistic way. Because, like, for all the doom and gloom here, I'm insanely optimistic about this thing. Like, not only Bitcoin, but But all the, like, being able to have a Zoom call with you on the other side of the Atlantic, I find that absolutely fascinating.

Like, whenever I'm in a, whenever I'm in a plane, I am absolutely in awe of the fact that we've built something that can fly. Like, people, people don't appreciate these things. We take them for granted, but, like, of course we got this. We can communicate with whomever we want. Anywhere on the planet by the click of a button, and we can send the money, frictionless and anonymous, uh, and uncensorable, uh, uncensorable, uh, anywhere, to anyone.

So of course we got this. Like, we got here because of the free market, and like, we didn't get here because of these Coercive institutions or democracy or anything, we got [01:11:00] here despite that, so, so, like, being anything but optimistic is, is just playing the game that's They want you to play, they want you to be fearful, and by they, I mean all the assholes of the world.

Like, uh, so, yeah.

Wrapping Up

Knut: Anyway, Dylan, I think it's been an absolute pleasure having you on and talking to you about this and that. Uh, so before we let you go, like, is there anywhere you want to, uh Uh, direct our listeners, uh, where can we find you online and where can we find your stuff and anything else in general?

Dylan: Yeah, no, I appreciate you having me on. This has been a blast. Um, took it in a whole bunch of different, uh, places. Uh, yeah, you can just find me on Twitter at Dylan LeClaire, um, underscore, doing a whole bunch of Bitcoin stuff. Um, I post on Nostr too. I'm not even sure how to hand that off to Nostr, but I need to post more, admittedly, um, but yeah, no, this has been great.

Uh, it's cool seeing you guys a couple of times at the [01:12:00] EU conferences. I think new, I think I saw you at Amsterdam too, if I'm not

Knut: Oh yeah, yeah, yeah,

Dylan: but yeah, no, this is, it's great. It's awesome that we get to talk, you know, X thousand miles away about this freedom, uh, this freedom technology, this orange coin. Uh, and yeah, I'm super bullish, um, super bullish on Bitcoin.

Uh, I think the, the spectrum or the array of how this can all happen, um, you know, both extremely quickly. Uh, faster than any of us can comprehend or fathom, um, is a very, very, uh, real possibility. Um, but likewise, you know, who knows, maybe it takes longer than we expect. And we're just, uh, on this super small corner of the internet where we're.

Very much obsessed with the thing and we're right, but it takes, uh, takes a long time or longer than maybe we'd want for other people to come along and understand. And I think that's okay too. Uh, freedom technology is important and everybody that needs to understand it will at some point. So yeah, super [01:13:00] bullish on the future.

Knut: Just a quick question there, are you coming to Madeira by any chance, to Bitcoin Atlantis?

Dylan: I am planning on it. Yes, uh,

Knut: great. Great, then we'll see each other soon. Looking forward to that one.

Dylan: Cheers guys, this was fun.

Knut: Thank you very much.

Luke: Thanks a lot, Dylan. This has been the Freedom Footprint show. Thanks for listening.